Madigan proposes tax on millionaires to fund education

Illinois House Speaker Michael Madigan is proposing a new tax on annual incomes of $1 million or more. The tax would raise over $1 billion.

By Doug FinkeState Capitol Bureau

Illinois House Speaker Michael Madigan is proposing a new tax on incomes of $1 million or more a year, just two days after multimillionaire Bruce Rauner won the Republican nomination to run for governor.

The Chicago Democrat introduced a proposed amendment to the state Constitution that would tack a 3 percent surcharge on incomes of more than $1 million a year.

Madigan said the tax would raise just over $1 billion annually that would be used to pay for K-12 education. The money would be distributed on a per-student basis, and Madigan said it would come out to about $550 a student.

“We've done this because we feel the millionaires in Illinois are better-equipped to support education than others,” Madigan said Thursday at a Statehouse news conference. “That's why we drafted this the way we drafted it.”

Madigan said there are 13,675 millionaires in the state. Madigan, who practices law in addition to his legislative duties, said he would be in that category “in a good year.”

Already firmly in that category is Rauner, who has said he wants the state's temporary income tax increase to expire at year's end, although he has not detailed how the state would cope with the loss of more than $1 billion in revenue. Madigan, who is also state chairman of the Democratic Party, said the amendment is not a shot at Rauner.

“It's introduced today because we had some time to discuss it with our members in the House and it's been well received,” Madigan said. “I happen to think this is a good idea. I've given a lot of thought to this. What we're doing here is calling upon people who are well-equipped to provide support for education.”

Rauner campaign manager Chip Englander said Rauner would be happy to pay more to help education, but “he doesn't support what looks like a first step towards empowering Mike Madigan and Pat Quinn to raise taxes on the middle class, small businesses and family farms.”

“The last time they raised taxes, they hit every Illinoisan with a 67 percent increase and they still turned around and cut funding for education,” Englander said in a statement.

He said the entire tax system in the state should be reviewed.

Regardless of what happens to the amendment, lawmakers will have to decide this year whether or not to continue the income tax increase. It will expire at the end of the year and leave a huge hole in the state budget. Madigan said Thursday he has taken no position on the issue.

Quinn has also not stated a position on continuing the tax increase. He is scheduled to deliver is budget address next week.

Madigan also has not taken a position on adopting a graduated income tax for the state. There are proposed amendments to the Constitution that would scrap the state's flat tax and impose a graduated tax based on income.

Madigan's millionaire tax plan would have to be approved by super-majorities in both the House and Senate in order to appear on the fall ballot. And even though Democrats hold super-majorities in both chambers, Madigan said he thinks the measure will pick up some Republican support as well.

“I would think there would be Republicans from areas of the state where they don't have any millionaires, and they ought to take good hard look at this and say, ‘Well, why not let the people decide?'” Madigan said.